Chapter 8 Ascertaining HR Supply

Personnel must be obtained from either Internal (current employees) or External (individuals not currently employed by the company). Many organizations will give preference to internal employees for the following reasons:
  • Reinforces employee loyalty and performance
  • Your employees are already socialized to the norms, rules, and procedures of your organization
  • You possess detailed knowledge (as per their HRMS skill inventories) of their performance and KSAs over time (i.e.: work history and experience).
Skills Inventory- an individualized personnel record held on each employee except those surrently in management or professional positions

Skills inventory contains information about all of the following:
1. Personal information (name, employee number, job classification and compensation band, emergency notification and telephone number)
2. Information, training and skill competencies (certificates, licences, and degrees/diplomas completed, including area of specialization, dates of attendance, and names of the institution attended)
3. Work history (date of hire, seniority, current job and supervisor, and previous jobs held in the organization and dates associated with them)
4. Performance appraisals (numerical score of the employee's history of performance in jobs in the organization)
5. career information (future jobs desired by the employee and those recommended by supervisors)
6. Hobbies and interests (community and volunteer associations)

Management Inventory- an individualized personnel record for managerial, professional, or technical personnel that includes all elements in the skills inventory with the addition of information on specialized duties, responsibilities, and accountabilities

Management inventories can be considered to be enhanced skills inventories because they contain all the above information and the following:
  1. A history of management or professional jobs held
  2. A record of management or professional training courses and dates
  3. Key accountabilities for the current job
  4. Assessment centre and appraisal data
  5. Professional and industry association memberships

Only when an organization has a properly functioning HRMS, complete with the skills and management inventories described above, is it really able to assess correctly the numbers of competency levels of its current workforce. This allows for a determination of workforce strengths and weaknesses that facilitates the planning of training and development. It will also identify which jobs need to be filled by external sources.

Succession Planning is critical to effective orgnizational functioning. Due to the highly dynamic and changing global environment it is important for HR managers to expand teir succession planning beyond the traditional identification of a shortlist of replacements for specific jobs. Increasingly, the focus is on identifying and developing the competencies that will be required by the organization to accomplish its competitive strategy.
Succession planning is critical for effective HR planning for the following reasons:
  • Enables an organization to respond appropriately and stay on track when inevitable and unpredictable changes occur. It provides for continuity and future direction even in the turmoil of change.
  • Helps develop people as they prepare for new experiences and jobs. This development can also help improve performance in current positions.
  • Succession planning takes into account employees' performance and promotes them for it, employees are postively motivated.
  • Supports new organizational structures and flexibility by explicitly providing backups to various positions. Reduces organizational dependency on any one employee.
  • Save time and money by having plans already in place to enable smooth internal employee movement and continuity. As a result, external hiring becomes the exception to the process.
Two aspects to Succession Planning
1. Long-term succession - process of training and work experience to enable individuals to assume higher-level job appointment in the future
2. Short-term emergency replacement- of individuals who have quit been terminated due to performance problems, have died, and so on

The first type of document used in succession planning is referred to as a succession/replacement chart. An important aspect of this chart is the succession readiness code, which is listed next to the names of all employees. This code contains 2 elements of information essential for succession planning:
1. The employee's level of performance in the current job (e.g., represented by a value on a five-point scale ranging from 1 to 5, where 1 = outstanding and 5 = unacceptable)
2. The employee's readiness for movement or promotion (e.g., A= ready now, B = probably ready within the next one years, C = needs development, D = not suitable for this job).

Ripple or chain effects- the effect caused when one promotion or transfer in the organization causes several other personnel movements in the organization as a series of subordinates are promoted to fill the sequential openings.

The second document that is produced for succession/replacement planning is referred to as a succession/replacement table, which provides additional information on each specific job, the incumbent jobholder, and all potential internal successors.

Markov Model:" a model that produces a series of matrices that detail the various patterns of movement to and from the various jobs in the organization.
Employee movement patterns have 5 different options.
1)Remaining in the current job
2)Promotion to a higher class job
3)A lateral transfer to a job with similar classification level
4) exit from the job eg termination, layoff, quitting
5)Demotion (which is very rare)

- also referred to as a probablistic or stochastic model
- the most popular technique used for contemporary supply-side HR planning applications
- widely used in educational and personnel planning
- found to be more accurate than regression models

Linear Programming - a complex mathematical procedure commonly used for project analysis in engineering and business applications; it can determine an optimum or best-supply mix solution to minimize costs or other constraints
Movement Analysis - a technique used to analyze personnel supply, specifically the chain or ripple effect that promotions or job losses have on the movements of other personnel in an organization
Succession readiness codes- codes listed next to the names of all potential successors; contain two elements of information essential for succession planning 1. the employees level of performance in the current job and 2. the employee's readiness for movement or promotion.

Vacancy Model - sometimes referred to as renewal or sequencing model
Vacancy, Renewal or Sequencing Model: analyzes flows of personnel throughout the organization by examining inputs and outputs at each hierarchical or compensation level.
*vacancy models been found more predicitve capacity than Markov models over short and long term periods
*common time frame for this model is one year into the future
*calculate pesonnel supply requirements one level at a time in "top-down" fashion beginning with highest relevant authority level
*normal direction personnel movement is from bottom to top
*supply needs of each salary level are determined by staffing changes
*number of personnel who are promoted away from the level
*personnel losses (retirement, departures, terminations)

Cost of Replacing Employees
Hard Costs
- advertisement
- headhunter, recruiting fees
- interview training
- travel costs
- adminex expenses
- cost of lost production
- bonuses
- increased salaries
- cost to replace a trained work ranges from 70-200% of departing employees salary

Soft Costs
- Lost business and customer contacts
- Decreased quantity or quality of work due to training and learning curve gaps
- Orientation and training times
- Decline in team morale and productivity
- Increased turnover due to the "follow-me" effect.

Retention Programs can be greatly enhanced by:
- Offering effective communication programs
- Facilitating an enjoyable and collegial work atmosphere
- Designing meaningful job
- Formulating and administering performance and compensation systems that reward better performers
- Offering more flexible and attractive work arrangements- flextime, telecommuting, cafeteria-style benefits plans

Other factors in retaining key employees are:
  • Developing a planned approach to employee retention (which examines the ususal company benefits, addresses individual needs, focuses on the long-term, is part of the vision of the organization, and is based on investment in employees).
  • Becoming an employer of choice with a goal of retaining employees from the day they join the organization.
  • Communicating the organizational vision and values frequently and in a clear and consistent manner.
  • Rewarding supervisors and managers for keeping good people.
  • Using exit interviews to obtain information as to why people are leaving the organization.

HR Solutions, Inc., a Chicago-based management consulting firm specializing in employee engagement surveys, analyzed recurring themes in employee surveys and compiled the following top ten list.
  • Higher salaries:pay is the number one area in which employees seek change. You can foster a work environment in which employees feel comfortable asking for a raise.
  • Internal pay equity:employees are concerned particularly with pay compression, the differential in pay between new and longer term employees. In organizations, with the average annual pay increase for employees around 4%, employees perceive that newcomers are better paid – and, often, they are.
  • Benefits programs, particularly health and dental insurance, retirement, and Paid Time Off / vacation days:specifically, many employees feel that their health insurance costs too much, especially prescription drug programs, when employers pass part of their rising costs to employees.
  • Over-management:Employees often defined by interviewees as: “Too many chiefs, not enough Indians.” Workplaces that foster employee empowerment, employee enablement, and broader spans of control by managers, will see fewer complaints. A popular word, micromanaging, expresses this sentiment, too.
  • Pay increase guidelines for merit:Employees believe the compensation system should place greater emphasis on merit and contribution. Employees find pay systems in which all employees receive the same pay increase annually, demoralizing. Such pay systems hit the motivation and commitment of your best employees hardest as they may begin asking what’s in this for me?As you adopt a merit pay system, one component is education so that employees know what behaviors and contributions merit additional compensation. Employees who did not must be informed by their manager about how their performance needs to change to merit a larger pay increase.
  • Human Resources department response to employees:The Human Resource department needs to be more responsive to employee questions and concerns. In many companies, the HR department is perceived as the policy making, policing arm of management. In fact, in forward thinking HR departments, responsiveness to employee needs is one of the cornerstones.
  • Favoritism:Employees want the perception that each employee is treated equivalently with other employees. If there are policies, behavioral guidelines, methods for requesting time off, valued assignments, opportunities for development, frequent communication, and just about any other work related decisions you can think of, employees want fair treatment.
  • Communication and availability:Let’s face it. Employees want face-to-face communication time with both their supervisors and executive management. This communication helps them feel recognized and important. And, yes, your time is full because you have a job, too. But, a manager’s main job is to support the success of all his or her reporting employees. That’s how the manager magnifies their own success.
  • Workloads are too heavy: Departments are understaffed and employees feel as if their workloads are too heavy and their time is spread too thinly. I see this complaint becoming worse as layoffs; the economy; your ability to find educated, skilled, experienced staff; and your business demands grow. To combat this, each company should help employees participate in continuous improvement activities.
  • Facility cleanliness: Employees want a clean, organized work environment in which they have the necessary equipment to perform well.
The job satisfaction study included over 2.2 million respondents with 2,100 organizations representing various industries, all surveyed by HR Solutions, Inc. An article regarding the human power of the workforce, management of and the effects/results of the Markov Method.

From Financial Post article:
Workforce Woes Hinder Manufacturing

Despite the rapid decline from 2005 through 2009, manufacturing saw a steady comeback in 2011 with $49.9 billion in sales in December. However, this much-needed growth is being hindered by one main issue - a labour shortage. Due to an aging workforce and a general lack of skills in the majority of workers, provinces are already reporting problems keeping their production in step with demand. Saskatchewan builders and developers are struggling with meeting the demand for new construction, and Alberta's natural resources industries can't attract adequate labour, despite generous compensation packages. The situation is so bad that Alberta's premier has begun recruiting prospective workers from the U.S.

Financial Post - March 2, 2012 Article on methods to address employee turnover